It was announced in April that Duck River Electric Membership Corp. had been given a $300,000 U.S. Department of Agriculture Rural Development grant to help build a spec building to attract an industry to Airport Business Park.

A speculative, or "spec," building is one built without a specific industrial customer in mind. Chamber of Commerce director Walt Wood briefed the council about the proposal.

DREMC is kicking in an additional $60,000 toward the grant, The total grant money will be loaned to whatever group or coalition is involved in putting up a spec building.

When the money is paid back, DREMC will manage it as a revolving loan fund for economic development. However, in order to keep the grant funds, there has to be a definite plan in place for a spec building within 120 days, and the deadline for this one is Aug. 15.

There are three sources of funding, Wood explained: The DREMC grant at no interest, payable over 10 years starting in the third year; a loan of up to $750,000 from the Tennessee Valley Authority at an interest rate of four percent or less, with the interest payable only for the first two years and fully amortized over the next eight years; and a loan for local banks with the same interest and payment schedule.

However, in order to secure those loans, a "deep pocket" must guarantee the loans and pay them as the interest and payment come due, and that's where the city, the county or both would come in.

The council was in agreement that the city and county needs an industrial spec building to bring jobs to the area. The building may attract a user or even bring an industry to town that might not use the structure, but moves here anyway.

"We don't see a number of industrial prospects because we don't have a building," city manager Ed Craig said. "They (industries) don't go to a place that doesn't have a building."

Wood told the council that over the past several years, a number of industries have looked at putting down roots here, but did not do so due to the lack of a building.

The main question debated by the council was the financial risk the city would take to construct the spec building.

The number-one risk the city would take is the building not being sold. Another risk is that the city would sell the building for less than the cost of building it. The city could lose hundreds of thousands of dollars on the building, Wood said.

But Craig stressed that whatever loss the city or county would accept for the building, "it is the price we are paying to attract the industry."

With the cost of steel going up every month, the city could be looking at constructing a building for $2.2 million, but only selling it for between $1.4 and $1.9 million.

"You're looking at up to an $800,000 loss if you sell it right away," Craig said. Every month, the amount of money lost would escalate due to the interest and principal the city would be paying.

If the city built it at $48 a square foot, but sold it for $30 a foot, the city would lose $983,378 at the end of two years. Even by selling the building at $40 a square foot, the city would still lose around $500,000 at the end of two years.

Craig said Friday that one of the reason this project is at a cost disadvantage is that the land would be paid at "pretty much retail" price. However, other communities have developed city/county industrial parks where the land is available at a much lower cost.

"They can eat the cost of the land and just have to deal with the cost of construction," Craig said. Taking away the land cost would make any loss the city or county would absorb much less painful.

Craig said there are many on the council, as well as the industrial board, who feel the best place for a spec building would be an area in northeastern Shelbyville that has access to rail lines and where a bypass is to be built.

Another idea is to build a "virtual spec building" or build it online. The city would be doing nothing but presenting a piece of property that's available or just get the building pad ready for a structure.

"You can make a computerized rendering of the building and then market it online," Craig said. "That may be a cheap approach that gets us into the game more than we are now."

Council members asked that Wood make the same presentation to county officials as well.